Decline is not Democratic

Although renewable energy made impressive advances this year, its impact has been dwarfed by the changes caused by the surplus of cheap, abundant natural gas made possible by hydrofracturing—fracking—of shale deposits. It will also be hard for renewables to equal the impact of shale gas in the coming years.

Similar drilling technology has led to a surge of oil production in the United States that could have it rivaling the production of oil in Saudi Arabia. It’s led to credible estimates that within a couple of decades—with the help of rigorous fuel economy standards—North America could produce as much energy as it consumes.

In 2006, Dr Kenneth Deffeyes spoke at a Peak Oil conference sponsored by Rep Roscoe Bartlett. He told us that we were near the peak, or maybe a small plateau, of fossil fuel production. The following year, he fixed the date of maximum production as 16 December 2005.

Now, if you read the Peak Oil websites back then, the expectation was that all hell was going to break loose after the peak. After TSHTF, fuel supplies would dry up, workers would lose their jobs, food would stop arriving at supermarkets, money would be worthless and men with guns would roam the streets. To counter what has become known as the Mad Max scenario, we were supposed to arm ourselves, and stock up on firewood, or better yet, buy a mix of wooded and farmable land with good water so we could head for the hills.

In short, Peak Oil was supposed to hurt everyone, rich and poor alike. Dystopian books like Cormac McCarthy’s The Road (2006), or Jim Crace’s The Pesthouse (2007) or James Kunstler’s World Made by Hand (2008) painted worlds where everyone had to deal with scarcity, and some reverted to savagery while others tried to maintain some degree of civilization. Even the online novel Star’s Reach, which John Michael Greer started in 2009, describes a world where everyone has suffered more or less the same deprivations from Climate Change and Peak Oil.

But it hasn’t happened that way at all. Peak Oil did occur, and fuels have gotten more expensive, but businessmen have been very willing to do whatever it takes to keep some sort of fossil fuel (unconventional liquids) flowing to those with enough money to pay. As evidenced by food protests like the Arab Spring and jobs protests like Take the Square and Occupy Wall Street, there certainly has been suffering, but it has not been the slightest bit democratic, or even free market. There is a growing number of poor and jobless, but except when they turn to making meth, they are almost invisible. Most of the rest of us just keep our heads down and work harder for less pay and less buying power and less chance of secure retirement.

It may soon get worse, though. On Resilience, formerly Energy Bulletin, Kurt Cobb thinks we’re in for a surprise:

There has been so much talk of the vast resource of natural gas now available to America in the form of shale deposits that it is practically unthinkable that U.S. natural gas production would actually fall. Of course, very low natural gas prices have led drillers to cut way back on drilling until the current glut is worked off and prices rise. What most people don’t know is that U.S natural gas production has essentially been flat so far in 2012.

According to the [WSJ] graph, the USA will produce 33.1 trillion cubic feet of natural gas in 2040 compared to the 23 trillion cubic feet that was produced in 2011. At the recent ASPO-USA conference the Canadian geoscientist David Hughes presented his studies of shale gas production in the USA. The field from which the most gas is produced is Haynesville and it was interesting to note that this field had an “overall decline rate” 52%, i.e. if they stopped new drilling then production would decline very rapidly.

… Business Insider reports that far from being profitable, the shale gas industry is facing huge financial hurdles. “The economics of fracking are horrid”, observes US financial journalist Wolf Richter. “Production falls off a cliff from day one and continues for a year or so until it levels out at about 10 per cent of initial production.” The result is that “drilling is destroying capital at an astonishing rate, and drillers are left with a mountain of debt just when decline rates are starting to wreak their havoc. To keep the decline rates from mucking up income statements, companies had to drill more and more, with new wells making up for the declining production of old wells. Alas, the scheme hit a wall, namely reality.”

As for unconventional oil, Cobb continues:

Tight oil (often mistakenly referred to as shale oil) is typically extracted using the same method as shale gas. But, as a result, tight oil wells experience the same types of declines. Wells drilled into the Bakken formation in North Dakota show an annual production decline rate of around 40 percent. As the rate of production grows from this deposit, more and more effort will have to be devoted to simply replacing production from wells that are swiftly declining. Already production increases are slowing. …

So essentially we are allowing the wealthy to impose long term ravages on the earth for short term rewards. We’re even financing it. And when those rewards stop arriving, the wealthy will once again turn to the government, and our taxes to finance the next scheme.